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World on Fire
Friday, 12 September 2008 11:09

Globalisation and democracy is setting the world on fire.  This is what Amy Chua argues in her thought-provoking book, “World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability”, Doubleday, 2003.


Many countries and regions have "market-dominant minorities".  The classic case is the Chinese in South East Asia.  The Chinese represent about 1 per cent of the Philippine population, but control 60 per cent of the private economy.  In fact, the Chinese are economically dominant in Indonesia, Malaysia and Thailand even though they account for a small share of these countries'  populations.  And as markets have been opened to the global economy, they have benefited much more than local populations.


So, it is not just a case of the rich winning more from globalisation than the poor have.  It is a case of ethnic outsiders winning more.  But this is not just a case of the Chinese.  This also applies to the Lebanese in West Africa, the Indians in East Africa and Fiji, the whites in Southern Africa, the substantially white in Latin America and the Jews in post-communist Russia.

At the same time, overnight democracy empowers the poor, indigenous majorities who have a welled up resentment against the market dominant minority.  This can provoke several types of backlash.  First, a backlash against markets, targeting the market-dominant minority's wealth.  Second, a backlash against democracy by forces favourable to the market-dominant minority.  Third is violence directed against the market-dominant minority.  It is easy to forget that democracy brought to power Hitler, Mugabe and Milosevic, and could even bring to power Osama bin Laden in Saudi Arabia.

Chua highlights a number of incidents.  In the Philippines, rich Chinese are routinely kidnapped, held to ransom and even sometimes murdered after the ransome is paid.  And yet the Filipino police do not chase the murderers because they sympathise with the ethnic revenge.  Indonesia's democratisation in 1998 was hailed with euphoria in the US.  But politicians campaigned on anti-Chinese platforms, and the Indonesian government nationalised some $58 billion worth of ethnic Chinese assets.  Anti-Chinese riots ensued with 5000 shops and homes of ethnic Chinese being burned and looted on the eve of democratization.  2000 people died.  Finally, the wealthiest Chinese left the country taking with them between $40 and $100 billion.

Chua takes her argument ever further arguing that Israel could be considered a market-dominant minority in the Middle East, and even the US could be also be thought of as a market-dominant minority in the world -- that's why they hate us !  The US is seen everywhere as the principal engine and principal beneficiary of global capitalism.  Thus it is in the US best interest to give back to the international economy and try to look like a global team player. 

In short, in many countries, democracy is not a natural partner of globalisation.  But, what do we do?  Chua is much stronger on documenting a phenomenon which challenges political correctness (she is able to exploit the fact that she herself is of Chinese Filipino origin) than coming up with solutions.  Indeed, there may be no easy solutions.  But, we need to find solutions otherwise the risk is a return to authoritarian politics as ethnic minorities might team up with local political leaders in an unholy corrupt alliance (as in Marcos government in the Phillippines).

We need to find ways to spread the benefits of global markets beyond just the small group of market-dominant minorities and foreign investors.  We need to find ways to redistribute the wealth, such as though land reform.  Chua proposes affirmative action policies for local majorities, as the Malaysian government has done for some time with limited success.  Philanthropic actions by the market-dominant minorities may also help, although in many cases these minority groups seem almost blind to their situation.  Also, the western world is in a state of denial about the importance and potency of ethnicity.


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